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Quiznos today announced that its senior lenders have voted overwhelmingly in favor of a pre-packaged restructuring plan that will reduce the company's debt by more than $400 million. In order to implement this plan, the Denver-based sandwich chain filed in Wilmington, Del., to reorganize under Chapter 11 of the U.S. Bankruptcy Code.
According to a news release, the company's plan is to "increase its flexibility as it executes operational enhancements designed to strengthen performance, revitalize the brand and reinforce its promise as a fresh, high quality and great-tasting alternative to traditional fast food offerings."
All but seven of Quiznos' nearly 2,100 restaurants are independently owned and operated by franchisees in the U.S. and 30 other countries around the world. As separate businesses, these restaurants are not a part of the Chapter 11 proceedings and are open and operating as usual, the release said.
The company said it expects to continue operating in the ordinary course of business throughout the restructuring process, and will continue working with its franchisees.
"The actions we are taking are intended to enable Quiznos to reduce our debt, execute a comprehensive plan to further enhance the customer experience, elevate the profile of the brand and help increase sales and profits for our franchise owners," CEO Stuart K. Mathis said in the release. "We look forward to continuing to work with and support our global network of franchise owners, who are the backbone of our business."
Quiznos' business plan includes several elements aimed at franchisee support, Mathis said. These include reducing food costs; implementing a franchise owner rebate program; in certain circumstances making loans available to franchisees for restaurant improvements; investing in advertising to improve location awareness; and providing new incentives for prospective franchisees.
"We are also introducing new technology at the restaurants and taking other actions to help our franchisees operate their businesses more efficiently," Mathis said.
Quiznos' relationship with its franchisees has been a contentious one, with many independent owners claiming the company inflates food costs, among other accusations.
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